Tuesday, February 12, 2013

Various Australian news outlets reported this week, that parents in Victoria who let their children miss school without a 'valid' reason may face a $70 fine per absence under a 'planned crackdown next year' by the State government.

How this will be enforced is unclear, but I was reminded of the story in Freakonomics, in which the authors reported on a study examining the day-care centre who charged parents a fine for turning up late to pick up their children.

The study looked at the habits of parents over a ten week period before the introduction of the fine and then for an identical period again after the punishment was introduced.

Surprisingly the results showed that the number of late pickups actually increased after the fine was introduced.
So not only did the fines not improve the behaviour, the fine actually made the behaviour worse.

The replacement of a social norm (be on time to pick up the kids) with an economic norm (the fine becomes - in effect - a baby-sitting fee) turned the situation into a market.

Therefore, by market rules a $70 surcharge on, say, a long-weekend - a simple transaction that buys a Friday off school for a kid might be viewed as reasonably good value when weighed up against avoiding weekend traffic to the country/beach or whatever, or offset that against the hikes in hotel prices and flights that coincide with official school holidays and $70 a day is still something of a bargain.

Various Australian news outlets reported this week, that parents in Victoria who let their children miss school without a 'valid' reason may face a $70 fine per absence under a 'planned crackdown next year' by the State government.

How this will be enforced is unclear, but I was reminded of the story in Freakonomics, in which the authors reported on a study examining the day-care centre who charged parents a fine for turning up late to pick up their children.

The study looked at the habits of parents over a ten week period before the introduction of the fine and then for an identical period again after the punishment was introduced.

Surprisingly the results showed that the number of late pickups actually increased after the fine was introduced.
So not only did the fines not improve the behaviour, the fine actually made the behaviour worse.

The replacement of a social norm (be on time to pick up the kids) with an economic norm (the fine becomes - in effect - a baby-sitting fee) turned the situation into a market.

Therefore, by market rules a $70 surcharge on, say, a long-weekend - a simple transaction that buys a Friday off school for a kid might be viewed as reasonably good value when weighed up against avoiding weekend traffic to the country/beach or whatever, or offset that against the hikes in hotel prices and flights that coincide with official school holidays and $70 a day is still something of a bargain.